The Kremlin’s plan to increase the Value Added Tax to 22% starting from 2026 will place Russia at the top of the world’s countries with the highest levels of VAT. According to estimates from the Institute of Economic Forecasting of the Russian Academy of Sciences, the total fiscal effect of this measure could rise to 1.4 trillion rubles (approximately 14.4 billion euros) from domestic VAT and up to 460 billion rubles (about 4.74 billion euros) from VAT applied to imports.
The authors of the analysis warn that this additional burden will be overwhelmingly felt by citizens: 1.23 trillion rubles (about 12.65 billion euros) will come directly out of people’s pockets, reflecting in a generalized increase in the price of all goods and services.
Specialists draw attention to the fact that such fiscal pressure on consumers will further affect the standard of living, at a time when a third of Russians already declare that they do not have enough money even for basic food. The VAT increase comes in addition to a wave of other announced increases, including excise taxes, recycling fees, and fuel prices, all expected to fuel inflation.
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